Expect the Best!

Copy for Real Estate Guide Column for 12-15-06 (549 words)

REAL ESTATE PATTERNS
By Ken DuVall

Expect the Best!

A new nationwide survey from the Nat’l Assn. of Home Builders (NAHB) confirms confidence, unshaken by the current slowdown. Eighty percent of the 2000+ homeowners polled expect the value of their homes to appreciate over the next 5 years, with 70% calling it their most valuable asset. The only way to go wrong is to NOT own a home!

This poll debunks the negative media’s speculation on the demise of the housing market. It’s interesting that their OWN polls came up with totally similar results. But when the mass media are at odds with the facts, they create or editorialize their own. The vast majority of Americans resoundingly believe that a home is the best investment they will ever make. I can vouch for that. Late flash: A skyscraper at 666 5th Avenue just sold last week for a NYC record of $1.8 BIL.

NAHB: “Housing is poised for solid future growth. We are in the midst of an inevitable adjustment following the boom when market activity soared to unsustainable levels. Demand is stabilizing. The downward adjustment to housing production should run its course by mid-2007. (Note: Santa Clara County new home sales last week were up an amazing 32% over a year ago. Builders there are running out of inventory).

“The market that emerges from this correction will display good balance between supply and demand and move back to a healthy, sustainable trend based on solid underlying fundamentals.” A temporary correction in prices distracts from the fact that it is primarily the NUMBER of home sales that affects the economy, and the number for 2006 will be the third highest on record.

“Today, home buyers have greater opportunities than they’ve had in years, with prices leveling, interest rates near historic lows, as our relatively strong economy continues to create job and income growth.” Buyers “fence sitting” in hope of “timing the market” for the “exact moment” this downturn hits bottom will miss out. Chico’s current inventory has dropped back to 517 units, vs. 620 last spring. Homes are selling. And Chico just made 17th on Farmer’s Insurance list of the “Most Secure Places to Live” in AMERICA! That’ll bring more people here for sure.

The peaks and valleys of any housing cycle are difficult to predict. The Office of U.S. Federal Housing reports average home prices are actually UP 7.73% through October. Last week former Fed Chair Greenspan reiterated that the “worst of the housing adjustment is over and sales figures have stabilized.” He also predicts “that inventory levels will come down at a reasonably rapid pace.” Time will tell.

Get this: celebs and investors just forked over $700 MILLION in a few HOURS snapping up 464 suites in Donald Trump’s newest luxury condo project in Honolulu. Those sales set a record for residential property both in dollar and unit volume sold in one development on a single day.

The average price was $1.5 mil, with 500 SF studios going for $400,000. The 3 BR penthouse went for a “paltry” $9 million! His 38-story tower next door is breaking ground. Sure, these buyers are the big, discretionary money crowd, but they’re certainly not stupid. Real estate is not going down the drain. I know better.

You all have a Wonderful and Blessed Holiday Season.  See you next year.

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico.  Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year.  See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Turnning the Corner

Copy for Real Estate Guide Column for 12-8-06 (458 words)

REAL ESTATE PATTERNS
By Ken DuVall

Turning the Corner, Etc.

The seeds of recovery are finally being sown. Kiplinger sees the housing market finding its floor by spring, beginning a gradual resurgence. Gains in unsold inventory are much slower now than they were earlier in the year, signaling the home supply is adjusting to weaker demand. New home builder’s pain is a plus for long-term stability of the market as well as for homeowners. Today’s lower interest rates are a balm for the market, keeping buyers in the game. Sales of existing homes, 85% of the market, seem to be stabilizing.

Commercial property remains hot. Overall, future demand for warehouses and offices, and other space will buoy values and rents. A 5% average gain for office rents is on deck for next year. California’s median home price is now $553,050, vs. Chico’s $365,000, meaning only 24% of Californians can afford that price. Not good. Meanwhile, the high end keeps on going up. The statewide median luxury home price in our major coastal cities has risen an average of 5% to nearly $3 mil at this writing. Wow!

Are consumers sick of development? In a word: yes. Opposition remains strong with 73% of Americans against almost any new development in their communities. Seventy percent would like to use taxes to keep land undeveloped. Even greater resistance surfaces about landfills, power plants, and quarries. Casinos remain unwelcome in most areas. Opposition to new mega Wal-Marts is clearly prevalent. Development has become a very divisive political factor in many local and regional elections.

Eighty one percent support laws stopping the use of eminent domain takings for private, vs. community, development. The preservation of existing community character figures prominently too. In short, it begins to look like development is OK as long as it’s not “here”. I said it before: the acronym NIMBY (Not In My Backyard) has pretty much been replaced by BANANA: Build Absolutely Nothing Anywhere Near Anyone! But “someplace else” is OK with just about everybody. Bottom line here: Land use politics has become one way to block- or support- building projects.

Developers, utilities, institutions and other private sectors are clearly facing mounting opposition and permit delays. The mere mention of any new development automatically becomes a magnet for dissention. Ninety three percent of Americans say that a political candidate’s position on growth and land use matters a very great deal.

Plus, the vast majority (this data is from a recent national poll) is way cynical over the system, with 75% of Americans saying that the relationship between elected officials and developers makes the permit process unfair, up from 70% last year. I’m not even going to go into neighborhood renewals, hospital expansions and emergency room poll results! It’s just not a real friendly climate out there right now.

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at http://www.kenduvall.com/ and call Ken at 345-3700 for all your real estate needs. Free consulting.